If you’re a small disadvantaged business owner you could be missing out on a lesser-known revenue stream – “set-aside” contracts. Government agencies, along with corporations who do business with the government, are mandated by law or corporate policies to spend approximately 20% of their budget with small disadvantaged companies. Keep reading to determine if you could benefit from this type of certification.

The Facts

Many federal, state, and city, contracts for certified small businesses go unclaimed because businesses do not know how to be recognized as a certified business. Certification is a review process designed by certifying agencies to ensure that a small business is actually owned, controlled, and operated by applicant(s) that demonstrate they are underserved group such as women, minorities, or veterans.

The Small Business Administration (SBA) offers the 8(a) Business Development program, commonly referred to as the 8(a) certification; to assist small businesses that are owned by individuals who are socially and economically disadvantaged, by providing them access to government contracting opportunities.

The Benefits

According to the SBA, 8(a) Business Development program participants can receive sole-source contracts, up to a ceiling of $4 million for goods and services and $6.5 million for manufacturing. 8(a) certified businesses are also able to form joint ventures to bid on contracts, participate in specialized business training, receive marketing assistance, counseling and other business development assistance provided by the SBA.

Qualifying

In order to determine if you are eligible for the 8(a) Business Development program your small business must be owned and controlled by one or more socially and economically disadvantaged individuals. According to SBA’s regulations, "economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities”. To determine if an individual is economically disadvantaged, he or she must provide the SAB with a narrative statement of economic disadvantage and personal financial information.

Minority groups such as Black Americans, Hispanic Americans,  Native Americans, Asian Pacific Americans and Subcontinent Asian Americans are presumed to be socially disadvantaged for the purpose of the 8(a) Business Development Program.  For an individual to be socially disadvantaged, the individual must convey personal experiences that have negatively influenced their entry or advancement in the business world.

Other Requirements

To prove ownership, the small business must be majority owned (51 percent or more) by a disadvantaged individual(s).  Additionally to prove control of a business, the majority owner should meet specific criteria such having the highest title within the company, being the highest paid, having the technical expertise necessary to carry out business development, holding all licenses needed to provide firm services, and working full-time for the applicant firm during normal business hours.

Other requirements include:
- The business must be classified as a small business according to the Small Business Administration
- The small business must demonstrate potential for success
- The small business owners must be American citizens, whether by birth or naturalization.
- The small business must have filed tax returns for the past two years.

As a business owner, it is important to understand that a small business certification can allow you compete for government contracts, increasing your business’ revenue. Even during a recession, the government must continue spending to fund its operations and stimulate growth. If you are seeking small business certification, it is important to decide who your target customer is to see which certification is best for you. The information for this article was provided by the professionals of BizCentral USA who specialize in small business solutions and business certification.